In
May 2012, Canadian pipeline company TransCanada reapplied to the U.S.
Department of State for a Presidential Permit to build the Keystone XL
pipeline. The pipeline would transport crude oil from the oil sands region
of Alberta, Canada, to the existing Keystone Pipeline System in Nebraska.
It also could accept U.S. crude from the Bakken oil fields in Montana and North Dakota.
A second segment of the Keystone XL pipeline system, the Gulf Coast Project, is proceeding
separately to connect existing pipeline facilities in Oklahoma to refineries in
Texas. When completed, the entire Keystone XL pipeline system would
ultimately have capacity to transport 830,000 barrels of crude oil per day
to U.S. market hubs. TransCanada submitted the May 2012 permit application
after its 2008 Keystone XL permit application was denied.

The State Department has jurisdiction over the Keystone XL pipeline’s approval
because it would cross the U.S. border. Before it can approve such a
permit, the department must determine that the project is in the “national
interest,” accounting for potential effects on the environment, economy, energy
security, and foreign policy, among other factors. Environmental impacts are
considered under the National Environmental Policy Act, as documented in
an Environmental Impact Statement (EIS). For the 2008 permit application,
a final EIS was issued in August 2011, followed by a public review period.
Largely in response to public comments and efforts by the state of Nebraska,
the State Department determined that it needed to examine alternative pipeline
routes that would avoid the environmentally sensitive Sand Hills region of
Nebraska, a sand dune formation with highly porous soil and shallow
groundwater that recharges the Ogallala aquifer.

The Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78) required
the Secretary of State to approve or deny the original 2008 project application
within 60 days. On January 18, 2012, citing insufficient time under this
deadline to properly assess the reconfigured project, the State Department
denied the Keystone XL permit. Since then, TransCanada has worked with Nebraska
officials to identify a pipeline route avoiding the Sand Hills. Its May 2012
permit application reflects that effort. The State Department has begun
the NEPA process anew, but will largely supplement the August 2011 final
EIS to include analysis of the new route in Nebraska, as well as analysis
of any significant environmental issues or information that has become
available since August 2011. The department estimates that it will
determine whether to approve or deny the new Presidential Permit by early
2013.

Since the State Department’s denial of TransCanada’s original permit
application, Congress has debated legislative options addressing the
Keystone XL pipeline. The North American Energy Access Act (H.R. 3548)
would transfer permitting authority for the Keystone XL pipeline project to
the Federal Energy Regulatory Commission, requiring issuance of a permit within
30 days of enactment. Several other bills (H.R. 3811, H.R. 4000, H.R.
4301, S. 2041, and S. 2199) would immediately approve the 2008 permit
application filed by TransCanada, allowing for later alteration of the
pipeline route in Nebraska. A House bill (H.R. 6164), the Domestic Energy and Jobs
Act (S. 3445), and S.Amdt. 2789 would eliminate the Presidential Permit
requirement for the reconfigured Keystone XL pipeline as proposed in
TransCanada’s permit application filed on May 4, 2012. S. 2100 and H.R.
4211 would suspend sales of petroleum products from the Strategic
Petroleum Reserve until issuance of a Presidential Permit for the Keystone XL
project. Although some in Congress have asserted congressional authority
over Keystone XL, changing the State Department’s role in issuing
cross-border infrastructure permits may raise questions about the
President’s executive authority. H.R. 3900 would seek to ensure that crude oil transported
by the Keystone XL pipeline, or resulting refined petroleum products, would be
sold only into U.S. markets, but this bill could raise issues related to
international trade agreements.

Date of Report: November 5, 2012
Number of Pages: 42Order Number: R41668Price: $29.95

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